Iberdrola Reduces Dividend as Regulation Undermines Profit

Iberdrola SA (IBE), Spain’s biggest utility, said regulatory measures in Spain and the U.K. undermined profit, prompting it to reduce its dividend guidance. The shares fell.

Earnings before interest, tax, depreciation and amortization were 1.49 billion euros ($2 billion) in the third quarter, below 1.53 billion-euro average estimate of 10 analysts surveyed by Blomberg. Net income was 546.7 million euros, beating the average estimate of 520.5 million euros.

Iberdrola will probably pay at least 0.125 euros per share to investors who want to receive cash rather than shares for the dividend to be paid in January. That compares with 0.143 euros paid at the same time a year earlier. The board set the payout ratio at 65 percent to 75 percent of profit, compared with 66 percent last year.

Spain has announced a series of power-market reforms designed to plug the shortfall that has accumulated as a result of selling power below the regulated cost and subsidizing renewable energy. The measures include taxes on generation and a reduction in subsidies.

Iberdrola fell as much as 1.6 percent, the most since Aug. 30, to 4.51 euros. It traded 1.4 percent lower at 4.52 euros at 9:15 a.m. in Madrid.

In the first nine months, Iberdrola said net income fell 3 percent to 2.27 billion euros and Ebitda fell 4 percent to 5.54 billion euros. In that period, regulatory changes in Spain had a negative impact on Ebitda of 503 million euros.

To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net

To contact the editor responsible for this story: Stephen Foxwell at sfoxwell@bloomberg.net

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